1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA ----oo0oo---- HENRIETTA J. MONDAY, an Individual, Plaintiff, v. SAXON MORTGAGE SERVICES, INC, a Texas Corporation; OCWEN LOAN SERVICING, LLC, a Delaware Limited Liability Company; U.S. BANK, N.A., AS TRUSTEE FOR THE REGISTERED HOLDERS OF ABFC 2007-WMC1 TRUST ASSET BACKED FUNDING CORPORATION ASSET BACKED CERTIFICATED, SERIES 2007- WMC1, an Ohio Business Entity; T.D. SERVICE COMPANY, a California Corporation; and DOES 1 through 10, Inclusive, Defendants. / NO. CIV. 2:10-989 WBS KJM MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS AND TO STRIKE ----oo0oo---- Plaintiff Henrietta J. Monday brought this action against defendants Saxon Mortgage Services, Inc. (“Saxon”), Ocwen Loan Servicing, LLC (“Ocwen”), U.S. Bank, N.A., as Trustee for 1 Monday v. Saxon Mortgage Services, Inc. et al Doc. 46 Dockets.Justia.com w w w . S t o p F o r e c l o s u r e F r a u d . c o m
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SAXON MORTGAGE SERVICES, INC,a Texas Corporation; OCWENLOAN SERVICING, LLC, aDelaware Limited LiabilityCompany; U.S. BANK, N.A., AS
TRUSTEE FOR THE REGISTEREDHOLDERS OF ABFC 2007-WMC1TRUST ASSET BACKED FUNDINGCORPORATION ASSET BACKEDCERTIFICATED, SERIES 2007-WMC1, an Ohio Business Entity;T.D. SERVICE COMPANY, aCalifornia Corporation; andDOES 1 through 10, Inclusive,
Defendants./
NO. CIV. 2:10-989 WBS KJM
MEMORANDUM AND ORDER RE:MOTIONS TO DISMISS AND TOSTRIKE
----oo0oo----
Plaintiff Henrietta J. Monday brought this action
against defendants Saxon Mortgage Services, Inc. (“Saxon”), Ocwen
Loan Servicing, LLC (“Ocwen”), U.S. Bank, N.A., as Trustee for
California courts have stated that “as a general rule,
a financial institution owes no duty of care to a borrower when
the institution’s involvement in the loan transaction does not
exceed the scope of its conventional role as a mere lender of
money.” Nymark v. Heart Fed. Sav. & Loan Ass’n, 231 Cal. App. 3d
1089, 1096 (3d Dist. 1991). However, Nymark is limited in two
ways. “First, a lender may owe a duty of care sounding in
negligence to a borrower when the lender’s activities exceed
those of a conventional lender.” Osei v. Countrywide Home Loans,
692 F. Supp. 2d 1240, 1249 (E.D. Cal. 2010); see Wagner v.
Benson, 101 Cal. App. 3d 27, 35 (4th Dist. 1980) (“Liability to a
borrower for negligence arises only when the lender ‘actively
The parties have requested that the court take judicial1
notice of several publicly-recorded documents related toplaintiff’s mortgage. (Docket Nos. 20, 26.) The court will takejudicial notice of these documents, as they are matters of publicrecord whose accuracy cannot be questioned. See Lee v. City ofL.A., 250 F.3d 668, 689 (9th Cir. 2001).
participates’ in the financed enterprise ‘beyond the domain of
the usual money lender.’” (quoting Connor v. Great W. Sav. & Loan
Ass’n, 69 Cal. 2d 850, 864 (1968))). “Second, even when a
lender’s acts are confined to their traditional scope, Nymark
announced only a ‘general’ rule.” Osei, 692 F. Supp. 2d at 1249.
To determine whether a duty actually existed on the facts of the
case, the Nymark court applied the six-factor test established by
the California Supreme Court in Biakanja v. Irving, 49 Cal. 2d
647 (1958). The Biakanja test balances six non-exhaustive
factors:
[1] the extent to which the transaction was intended toaffect the plaintiff, [2] the foreseeability of harm tohim, [3] the degree of certainty that the plaintiffsuffered injury, [4] the closeness of the connectionbetween the defendant’s conduct and the injury suffered,[5] the moral blame attached to the defendant’s conduct,and [6] the policy of preventing future harm.
Glenn K. Jackson Inc. v. Roe, 273 F.3d 1192, 1197 (9th Cir. 2001)
(quoting Biakanja, 49 Cal. 2d at 650) (alterations in original).
Although Biankaja applied the test to determine whether a
defendant could be held liable to a third person not in privity
with the defendant, Nymark held that the test also determined
“whether a financial institution owes a duty of care to a
borrower-client.” Nymark, 231 Cal. App. 3d at 1098.
In support of the first Nymark exception, plaintiff
contends that “[i]llegally force-placing overpriced insurance isnot part of a lender’s usual role as such an action exceeds the
scope of a lender’s conventional role as a mere lender of money.”
(FAC ¶ 38.) Plaintiff has provided no support to show that
force-placing insurance constitutes an unusual level of
involvement in her loan by Saxon such that it would create a duty
As was the case when the court granted U.S. Bank and
Ocwen’s first motion to dismiss, plaintiff has cited no authority
for the proposition that a subsequent purchaser of a loan, such
as Ocwen, or the purchaser at a foreclosure sale, such as U.S.
Bank, owes a duty to ensure the legitimacy of the record-keeping
of the original owner of the loan. See Hardy v. Indymac Fed.
Bank, 263 F.R.D. 586, 593-94 (E.D. Cal. 2009). Accordingly, the
court will grant Ocwen and U.S. Bank’s motion to dismiss
plaintiff’s negligence claim. See Marks v. Ocwen Loan Servicing,
No. C 07-2133, 2009 WL 975792, at *7 (N.D. Cal. Apr. 10, 2009).
2. Negligent Misrepresentation Claim against All
Defendants
The elements of negligent misrepresentation under
California law are: “(1) the misrepresentation of a past or
existing material fact, (2) without reasonable ground for
believing it to be true, (3) with intent to induce another’s
reliance on the fact misrepresented, (4) justifiable reliance onthe misrepresentation, and (5) resulting damage.” Apollo Capital
The claim is not barred by the economic loss doctrine,2
which would otherwise preclude recovery for purely economic loss.That doctrine is intended to bar recovery that could be obtainedthrough a breach of contract action. United Guar. Mortg. Indem.Co. v. Countrywide Fin. Corp., 660 F. Supp. 2d 1163, 1180 (C.D.
Cal. 2009). The doctrine cannot be properly applied to thiscase; it normally applies in products liability and constructiondefect cases where physical injury is even possible and acontract has been breached. Furthermore, the same Biakanjafactors that applied here also provide an exception to theeconomic loss doctrine when a special relationship exists betweenplaintiff and defendant. See J’Aire Corp. v. Gregory, 24 Cal. 3d799, 804-05 (1979).
must state with particularity the circumstances constituting
fraud . . . .” Fed. R. Civ. P. 9(b). A plaintiff must include
the “who, what, when, where, and how” of the fraud. Vess v.
Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003)
(quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)).
Conspiracy is a legal doctrine that establishes joint
and several liability by the conspirators for an underlying tort.
See Entm’t Research Grp. v. Genesis Creative Grp., 122 F.3d 1211,
1228 (9th Cir. 1997). A conspiracy to commit a tort therefore
requires the commission of the actual underlying tort, although
every member of the conspiracy need not commit all elements of
the tort individually so long as a conspiracy has been formed and
he or she acts in furtherance of its design. See Applied Equip.
Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th 503, 510-11 (1994).
The allegedly fraudulent statements plaintiff complains
of are identical to those in the negligent misrepresentation
claim. (FAC ¶ 58.) As discussed above, plaintiff has not pled
justifiable reliance or damages resulting from any of defendants’
alleged misrepresentations, so her claim for fraud fails. The
theory of civil conspiracy fails with the underlying tort. See
Applied Equip., 7 Cal. 4th at 510-11. The court therefore will
grant defendants’ motions to dismiss plaintiff’s fraud claim.
4. Cancellation of Instrument and Set Aside Trustee’s
Sale Claims against All Defendants3
The court previously denied Ocwen and U.S. Bank’s3
motion to dismiss the cancellation of instrument claim (DocketNo. 14) and those defendants do not contest it here. Plaintiffadmits that Saxon, which no longer owns the loan, is not a properparty to the cancellation of instrument claim. Saxon istherefore dismissed as to that claim.
Communications under section 47(b) are privileged4
without regard to malice. Cal. Civ. Code § 47(b). Thus, even ifplaintiff had sufficiently alleged malice, her claim would fail.See Hagberg v. Cal. Fed. Bank FSB, 32 Cal. 4th 350, 361 (2004)(privilege applies “without respect to the good faith or maliceof the person who made the statement”).
provision, or exceptional circumstances, attorney’s fees are to
be paid by the party employing the attorney. See Cal. Civ. Proc.
Code § 1021. However, “[a] person who through the tort of
another has been required to act in the protection of his
interests by bringing or defending an action against a third
person” may recover attorney’s fees. Prentice v. N. Am. Title
Guar. Corp., 59 Cal. 2d 618, 620 (1963). In Prentice, as in this
case, the alleged negligence of one party (here, Saxon) forced
the plaintiff to bring a suit to quiet title against other
defendants. Thus, it is possible that attorney’s fees could be
requested, and the court will deny Saxon’s motion to strike.6
Prejudgment interest is only available when a person
“is entitled to recover damages certain, or capable of being made
certain by calculation,” when “the right to recover . . . is
vested in him upon a particular day.” Cal. Civ. Code § 3287.
Plaintiff’s request for prejudgment interest is not based on any
certain damages. Thus, Saxon’s motion to strike plaintiff’s
prayer for prejudgment interest will be granted.
Saxon’s motion is moot with regards to punitive5
damages, which were only requested under plaintiff’s fraud claim.Plaintiff concedes that her prayers for injunctive relief andconstructive trust may be properly stricken as to Saxon.
Vacco Indus., Inc. v. Van Den Berg, 5 Cal. App. 4th 346
(2d Dist. 1992), holding that Prentice does not apply whendefendants are joint tortfeasors, does not change the outcome. Ajury could find that only Saxon was negligent and that it wasnecessary to sue the other defendants for recovery of theproperty. The court cannot conclude that attorney’s fees willhave “no possible bearing” on the litigation. Lilley v. Charren,936 F. Supp. 708, 713 (N.D. Cal. 1996).